Mixed markets in Europe, US stocks slightly lower, precious metals and iron ore higher, ASX futures down 24 points

For the third month in a row, equity markets are putting on bullish performances into the end of the month following mid-month sell-offs. The February dip was deeper than January, but this time around the recovery has come with some better looking performances from commodities. Over the last 30 days:

  • Brent crude oil (OILUK) is 16.25% higher,
  • US dollar spot gold (XAUUSD) is 13.24% higher,
  • US dollar spot silver (XAGUSD) is 10.76% higher,
  • Copper (COPPERUS) is 6.3% higher; and 
  • Iron ore is 10.5% higher.

Added to this, Chinese stocks are only 3% lower over the last 30 days and the Chinese yuan has consistently rallied since early January. As such, the confluence of factors that have been causing panic is thinning out, and markets are taking a different tone.

Today's first chart puts this into context by showing an ASX 200 making small and steady moves toward the upper end of its 2015/2016 downtrend channel, and we'll continue to look for the absence of fresh lows in order to get closer to declaring a departure from this downtrend. In today's second chart, I've shown the US dollar index, which is a very important indicator that offers an insight into the potential of the world's highest-growth markets to perform. It's easing from the 100 level is an important move, I hope it is sustained, I hope it has further to fall. It is getting some short-term strength from a falling euro at present--linked to the potential of intensified quantitative easing in Europe--but, most importantly, has entirely departed from its 2015 uptrend. 

No big news out today for global markets, locally Medibank Private (MPL) has released it's big jump in first half profit; however, this was flagged back in January and the stock took a huge leap up when that operating update emerged, so I'm not sure how much more excited the market will get over that today. NPAT was $227.6 million, but the operating profit of $271.7 that drove the NPAT should already be in the price.

Source: Rivkin, Saxo Bank

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This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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